Asleep at the Stimulus? (by guest blogger Martin Petersime)
Asleep at the Stimulus?
by Martin Petersime
Are you tired of hearing about the economic stimulus package? Are you skeptical of its effectiveness? Aren't there any original ideas out there?
Everyone says tax cuts are needed, but no one knows whether people will SPEND their tax savings. Here's a suggestion: don't give tax cuts—give pre-paid debit cards. (In Martin's world, they would only be sent to people in return for community service, but either way, it guarantees every single dollar will be spent.) Oh, and put a deadline on the debit cards of April 1. Speed counts.
The auto makers are ailing. Here's an idea: a $3000 rebate to everyone who buys a fuel-efficient (35 mpg or better) car by April 1. Perhaps half the amount for other vehicles—to get rid of inventories. Reduce the amount by $500/month until it expires. If Detroit can't turn itself around with the extra business, then it SHOULD disappear.
I hate encouraging emission-spewing vehicles over cleaner transportation. Here's a thought: reward those who use mass transit—a $500 rebate for every citizen who sends in vouchers showing 100 bus/subway/train rides.
States and cities are looking for aid. Here's a notion: no grants—all loans. Loans guarantee that local governments won't use the money frivolously. It also means the cost to the federal deficit, long-term, won't be as high. Add incentives for early pay-back (25% discount if re-paid within two years) or for investing in green technology.
There are creative ideas that would guarantee direct stimulus to the economy and the industries that need it most. (Think tax incentives for energy savings in homes and buildings.) Why do all the tired ideas from Washington seem so, well, tired?
Martin's previous Crisis Chronicles blog was Of Pride and Predjudice.
To contact Martin, leave a comment below or send an e-mail to jc@crisischronicles.com
and I will happily forward your remarks to him. You may also snail mail him at this address:
Martin Petersime #270-294
P.O. Box 8107
Mansfield, Ohio 44901-8107
I vote for Martin as Secy. of Commerce.
This man has a brain and uses it.
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this all sounds reasonable to me. Didya hear that a Republican is gonna be sec of commerce?
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I don't know enough about the soon-to-be SecCom to make a judgment. An intriguing choice, to say the least.... The fact that he's a Republican gives me a bit of pause, though I tend to want to trust that the generally thoughtful Obama knows what he's doing. Then again, I trusted his Daschle pick, too - perhaps a little too unhesitatingly.
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I feel compelled to write a comment since I have seen too much already on the subject of interest accruing on student loans and credit cards. People are also losing their homes since the banks foreclose when the payments are late or not coming. And if you have ever had a student loan, a credit card or a mortgage and can't pay for ANY reason you and millions of others are in deep doo doo, to put it mildly. It is the basis for the recession and may turn into a depression and I see it all as problems with INTEREST that is owed the banks. Remember Freddie Mac, Fannie Mae and there is also Sallie Mae that has taken over from the bank or government backed loans that were turned over to the private sector. Now the government is trying to save those banks by giving them bailout funds of billions of dollars and it isn't working. For those who pay their mortgages and credit card bills and student loans on time there is no problem but the real stink is so many are unemployed right now they can't pay anything. The interest rates simply go on and on and accrue every month until the hole is so deep that you owe more on the interest than on the original loan. I don't know where your original loan for $1,900 was made but it wasn't true that in prison you didn't have to pay interest on that balance. Was the loan shifted over to Sallie Mae? Did they send you a bill every month? What happened? I can see it clearly since my family also has had problems with this. My husband co-signed a student loan for Marc. He died. Sallie Mae still sends him a notice in spite of the fact that they have been informed many many times that he is deceased. Since Marc doesn't have any money right now since he is unemployed he tells me he has to fill out papers and send them in to Sallie Mae and then it takes a couple of months for them to accept the fact that he cannot pay. It is an ongoing problem. My daughter-in-law who owed $5,000 on a credit card and couldn't pay it sent them $3,000 and when she got the statement she still owed $5,000 since interest had accrued.
It is perfectly legal to charge interest she was told and there was nothing she could do about it. If someone or a bank lends money they expect to charge interest until the loan is paid back. Those banks and corporations that have taken bailout money have been paying their execs millions of dollars in bonuses and perks. Now Obama wants to have their salaries cut to $500,000 a year. The president of the U. S, only makes $400,000. They have been using their
bailout money to give exorbitant salaries to those who put the banks into deficits in the first place and now we the taxpayers have to bail them out. Things do have to change and what happened to you John is just the tip of the iceberg. With 350 billion we could pay off every mortgage and credit card for those who don't have a salary.
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In defense of student loans, I have to say that of all the loans I will say the student loan is the one that was most slanted in my favor, with a very low interest rate, rewards for paying early and often, and even deferrment when I was staying home with two preemie babies. The biggest problem I see with the payments of interest in this country is in the credit card industry, which regularly charges interest that amounts to usury like a loan shark. It is not only immoral, but illegal to charge the amount of interest that they routinely collect. There are laws against gouging the borrower, but the credit card industry has been allowed to operate above these laws for years. On top of that they solicit on college campuses, offer credit to people who have no way of paying back the amount they are allowed to borrow (see mortgage crisis too) and prey on people who have been released from their debts in bankruptcy by the standard practice of offering new debt free individuals more credit after they could not pay back what they already owed. I worked in bankruptcy and saw people whose minimum payments were more than their salary. The creditors in most cases got all of their principal back and a lot of interest, just not as much as they charged.
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Good points. Tax cuts obviously don't work. I am skeptical of the stimulus checks also. I got $1500. last time and while I did use it to pay some bills it didn't make any long-term measurable difference in my finances. I didn't go out and buy anything I would not have bought anyway. I would like to see some mortgage relief for the people losing their homes. It's not in the best interest of our communities for people to be put out of their homes rather than pay for them and it's not the best we can do as human beings either.
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As I mighta mentioned before, when I went to prison in 1993 I couldn't pay my bills, so I defaulted on my student loan. Thanks to interest, the $1,900 I owed then is up to $6,500 (never mind that someone at the Dept. of Ed. told my mom in 1994 that since I was "incapacitated," no interest would accrue. Now every year the government takes my tax refund and applies it to the interest. They take my wife's too - and make her file an "injured spouse" form to get her share back (takes an extra two months). To make a long story short, they take our stimulus checks too (and keep mine). I'm not sure what that actually stimulates, except maybe a bit of resentment....
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That's the best reason I ever heard for not paying off a student loan. The Government, State and Federal don't always make sense. You made reference to the loss of eleven years that you were in prison. It seems logical to me that would include being barred from earning an income. Not only do I have to question how the govt. thinks you are going to pay off a loan when you are in prison, but how they do not acknowledge that eleven years of earning power were denied you. Regardless of guilt or innocence, there should be a logical duration of punishment. I don't think it's in anyone's best interest to financially cripple someone who has paid their debt to society (in circumstances where there was a debt to pay). This puts me in mind of my brother. He had quite a few youthful indiscretions. He never hurt anyone but himself, but he did break the law. His problem was with alcohol, and I'm glad to report it is long behind him. The sad part is that the punishment goes on. In NJ you can lose your driver's license for underage drinking even if you are nowhere near a car. That happened to him too many times. So now, he's 36 years old, won't have a driver's license till he's 45 and has bad credit from outstanding fines(even though he has since paid off all of thousands in fines that he owed. On the bright side he managed to get the highest casino control commission clearance in spite of his record, so his was able to recover a decent career. The irony is that he's working, raising three children and has a job with a high level of security and trust, yet he's not allowed to drive a car.
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It does seem unfair to penalize you in a multiple of ways.. though this seems inadvertent. It seems to be the product of a system that treats everyone in a faceless sort of way. But it still does seem heartless nonetheless.
I sometimes wonder if a lawyer might not be worth it to take on these sorts of things but that often takes more time and money that could be better used elsewhere. And bring to the surface som much that probably would best be buried.
I think these sorts of things are the things people need to know can happen. You found out the hard way... by being chewed up in the system.. part of that coming from having a lawyer who seemed to not be a true advocate for you. It's sad to think other people have probably had this happen too or worse.
I'm sorry this and more has happened.
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Chris it seems to me that there is very little relief for this particular problem. People who have amassed fines that are far more punitive than their crime warrants and people who couldn't pay a student loan because they were in prision are cut off at the knees because these are two debts that in most cases cannot be discharged in Bankruptcy. There would be a lot of diffferent laws that would have to be changed in order to bring relief. But Change has to start somewhere. Talking about the reality is a start. My brother amassed around $50,000. in fines by the time he was 22. That is a debt that is going to affect him for the rest of his life. Were fines really designed to punish someone for the rest of their lives? That's what doesn't make sense to me. As far as people re-entering society after serving time in prison: Through this punishment the convicted person has not only lost time, but he's also lost building a career, a family, a savings account. These things can't be ignored. It's very important, for the communities that they live in, that people are able to re-enter society after they have served time in prison.
This conversation put me in mind of the story of the child molesters living under the bridge. We have to deal with these problems so that they don't become more serious.
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It really is the sound of a big bubble bursting… isn’t it? When you look at the various reports coming in on the economy even this week. It is an across the board shrinking of the economy. It’s not just the banks and auto companies anymore that are hurting…. but essentially everyone. The great fallout has begun it seems. The great American overspending diet has begun. And that seems to be true from the top of every super corporation, local and state governments, all the way down to bottom of the empty pockets of the local family.
I have a lot of thoughts about it I’d love to share…. And actually started writing a long response but if I did my comment would be longer than Elena’s and no one is going to read it. So just this “shorter one” instead.
Suffice it to say it is all a mess…. that we will all have to tighten our belts to fix it… and hard choices will have to be made by all. I hope congress will at least try to make some wise, bipartisan choices… but from the way thing sound this week it seems unlikely. I am already peeved by the wrangling over things.
Anyway…. thanks for sharing Peter’s thoughts…. They made me think a lot about what viable solutions might actually look like, I wish I could feel there was something I could do that could make a difference. The frustration is that I don’t see anything.
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I agree with lots that's been said, and I appreciate all your comments. I'm sure Martin does, too. I'll probably print them out and send them to him today.
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Hey John being newbies to your site i enjoyed reading the post but this books really seems very new to me.
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